Wait for the Candy
Ever been to a birthday party (or any party really) and watch person after person go up and take turns whacking a piñata? The first person goes up, gets blindfolded, spun around, and set loose to swing as hard as they can. Most times that person can hit the piñata 3, 4, 7 times and nothing happens. Next person goes up, same thing. 3rd, 4th, maybe 5th person all swing away and no candy comes out. Finally, the last person, no matter how small or weak a swing they make finally makes the piñata explode and the celebration begins! The candy has come! The reward is here!
Now, did the last person finally break the piñata or was it the cumulative effort of everyone that had gone before them? It was the group effort of course! It was the first hit from the first person compounded repeatedly making invisible progress until finally the piñata burst.
The same thing happens repeatedly in our personal and professional lives. I speak with business owners daily, and I am constantly stressing to them about putting in the work on the foundation of their business. A few key subjects that I stress to every client regardless of size or industry:
Schedule time each week to review company financials.
- Review company AR and AP if applicable
- Review cash flow (hard to do without an updated AR and AP)
- Review work in progress. Is billing up to date? Should deposit or progress invoices be sent out?
- Review completed projects and job profitability reports
- Review budget vs. actual project reports if applicable
Those are just the weekly items! There are monthly, quarterly, and annual items that should be addressed as well. All those items listed above can be reviewed in as little as 30-45 minutes per week depending on the size of your business. Yet too many business owners I speak with simply can’t “find” the time or won’t commit to doing it on a regular basis.
Why? Because the candy doesn’t come out right away! This work pays off, but the results aren’t necessarily immediate. Sometimes weeks or months of work won’t show their true results until much later and 18 months from now you don’t realize that the work you put in today was the start of the explosion of success you will be experiencing.
For example, if you review your job profitability reports after each project is complete you can identify and adjust where necessary. If you estimated the job to have a total Cost of Goods Sold (COGS) of $5,200.00 but upon completion the actual COGS is $6,450.00, what happened? Was there a mistake in the estimate? Did pricing go up from time of estimate until time of job? Was there additional work performed that was never billed for? Depending on the situation and the client, you might not be able to do anything to correct the loss on this project, but the knowledge learned allows you to adjust moving forward and ensure that you don’t keep making the same mistake repeatedly.
For some, this type of work is exciting and fun (yours truly). For others, it is grueling, and they don’t see the value in spending time reviewing “the past” when they could be spending time out in the field generating income either via landing new work or producing on existing projects. So, it is not a priority, and each week something more important comes up and each week the time for reviewing company financials never arrives. When this happens, adjustments are never made, and the potential of the company is never reached.
The people that dedicate the time to doing it however are gaining insight into their business. They start correcting mistakes before they happen. They are putting in the hits to the piñata that are going unnoticed. They have the tools to create more accurate estimates that generate REAL profit for the company. Eventually, as the weeks, months, and years go by MAYBE the time they spent in the office reviewing financials resulted in less jobs landed, but would you rather have 10 jobs that you aren’t making money on or 7 that are all profitable?
I would argue that the cumulative effort of reviewing financials and job profitability, etc. will not lead to less projects, but more! The more organized and knowledgeable you become in your business, the more EFFECTIVE you are overall. Being accurate on your estimates creates less friction during the project, which leads to more projects being completed on time, which leads to happier clients, which leads to referrals, and new projects, etc. Understanding your financials allows you to create more accurate estimates in a shorter time frame, which allows you to submit estimates quickly, which lands more work.
Everything is connected. Becoming more committed and organized to your company financials and estimates does not only impact your business in one area. The positive results bleed into all areas of your business. For example, perhaps as you start to prioritize your schedule to include reviewing your finances, your schedule becomes more organized in general. You are now focusing on what is the best use of your time. This might allow you to be more responsive to client emails, questions, etc. because you have a firm understanding of how your time is going to be spent each week. This creates better relationships with your existing and potential clients, which leads to more work as described above.
There are an extraordinary amount of busy people and busy companies out there. How many are effective? How many are reaching their potential and instead of focusing solely on being busy while the cash flow and bottom-line suffers are instead focused on being effective and getting that candy? I can’t promise immediate results, and I definitely won’t promise you that it will be easy but keep hitting the piñata. Keep (or start!) putting in the work today, and tomorrow, and next week. You never know when you are about to take the final swing that is going to break the piñata wide open for you!